Washington: US President Donald Trump on Monday claimed that negotiations with Iran were continuing despite Tehran's denial, warning that the Islamic Republic was facing its "last chance before decapitation."

Speaking to reporters at the White House, Trump said he had agreed to continue talks with Iran at the request of Saudi Arabia, the United Arab Emirates, Qatar and other regional countries.

Iran's foreign ministry denied that negotiations with Washington were taking place, but Trump insisted otherwise.

"We are talking right now," Trump said.

Calling the ongoing diplomacy a final opportunity, Trump added, "This is a last chance for them to sign a good document. I want to give them every last chance before decapitation."

Trump said discussions were focused on reopening the Strait of Hormuz and addressing Iran's nuclear programme. He said reopening the strategic waterway could happen "literally by tomorrow," while denuclearisation could "take a little while."

The comments come as tensions remain high following months of conflict between the United States, Israel and Iran. While diplomatic efforts have produced intermittent periods of calm, Iran continues to retain its enriched uranium stockpiles and missile capabilities.

Earlier on Tuesday, the UK's maritime security agency reported that a cargo vessel had been struck by an "unknown projectile" in the Strait of Hormuz off the coast of Oman. Authorities are investigating the incident.

Trump also criticised Tehran for denying negotiations.

"Whether Iran wants to admit it or not, we are, in fact, talking of a solution to a problem that they have caused, for decades."

Reiterating Washington's position on Iran's nuclear programme, Trump said,

"The denuclearisation of Iran has to happen."

Iran, however, maintains that it is not negotiating with the United States and says its current discussions are with Oman over managing navigation through the Strait of Hormuz.

Cargo vessel hit by 'unknown projectile' in Hormuz Strait

A cargo vessel was struck by an "unknown projectile" in the Strait of Hormuz off the coast of Oman, a British maritime agency said on Tuesday, without giving specifics on damage or injuries.

The vessel, which has not been named, reported being "hit by an unknown projectile" and authorities were investigating, the United Kingdom Maritime Trade Operations (UKMTO) said, adding the incident occurred 20 nautical miles (37 kilometres) northeast of Al Khasab, Oman.